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Carbon Market Trading Revives

     Analysts expect to see a significant revival, in voluntary terms, for carbon market trading, due in large part to the recent declarations by Pres. Obama that the United States will aspire to bring down carbon emissions by a significant percentage over the next decade. The announcement was hailed by environmentalists, who had been disappointed by the seeming lack of action at the Copenhagen Summit.

The declaration by the United States administration, that the country would reduce its greenhouse gas emissions significantly over 2008 levels, has led many to hope that legislation will soon be passed to enforce compliance among big business operations in the country. This concept moved forward from theory to a bill through the initiatives of the House of Representatives last year, though the Senate caused delay to the passage of the said bill.

Analysts expect to see a significant revival, in voluntary terms, for carbon market trading, due in large part to the recent declarations by Pres. Obama that the US will aim to cut down carbon emissions to a considerable percentage within the next ten years. Environmentalists have praised the announcement as they have been disappointed for quite a long time with the outcomes of the lack of action for the agenda of the Copenhagen Summit.

If the US Senate passes the equivalent of the American Clean Energy and Security Act, a "cap and trade" scheme will be set up as a mandatory market mechanism, similar in concept to the European Union's Emissions Trading scheme or the current initiative underway in the United Kingdom. This will undoubtedly trigger demand for voluntary emission reductions as organizations take action to buy credits from an international market.

Carbon market trading is likely to see a boost through 2010 as US businesses seek to purchase credits internationally, as they seek voluntary emission reductions. This is very much tangible with much evidence such as the increasing demand for unit deals in other countries such as India, for example.

Currently, voluntary emission reductions represent only a small part of worldwide emissions reductions, with certified reductions under the various existing schemes far in excess. In the United States, the Chicago Climate Exchange is set up to operate a "cap and trade" scheme on a voluntary basis, although participants must commit to following through once they join.

US business leaders imagine that if they take proactive steps to engage, that they will be ahead of the game as and when mandatory carbon reporting comes into place. Their carbon market trading activities prompt them to purchase the voluntary emission reduction credits, which they can "bank."

If mandatory carbon market trading is passed, it is likely to formulate a real cost for carbon as a traded commodity in the US. In addition to the sheer cost of purchasing energy, companies will have to account for the cost of emitting carbon as a consequence and this would place a very real additional cost to the bottom line.

With healthcare out of the way, it is likely that Pres. Obama will next turn his attentions to energy and we can expect to see the Senate take up potential passage of the ACES Act as 2010 unfolds.

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Posted on 2010-06-16, By: *

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